Wesco paper higher; Diamond Sports extends exchange start, paper mixed; TPC notes quiet

By Cristal Cody

Tupelo, Miss., Feb. 7 – Wesco Aircraft Holdings Inc.’s secured bonds (Caa3/CCC+) caught the eye of the distressed space on Monday as restructuring reports circulated.

Paper from the aerospace supplier, now doing business as Incora after a merger with Pattonair Ltd., improved about 1¼ points to 4 points in heavy trading.

Diamond Sports Group LLC’s notes went out unchanged to softer in the secondary market ahead of a new reported start for the company’s kickoff to solicit consents for an exchange offer.

The junk space was slightly weaker with stocks mixed and oil down on the day.

The iShares iBoxx High Yield Corporate Bond ETF fell 6 cents to $83.71.

West Texas Intermediate crude oil benchmark futures for March deliveries gave back 99 cents to settle at $91.32 a barrel.

Distressed secondary action was light over the day, according to market sources.

TPC Group Inc.’s 10½% senior secured notes due 2024 (Caa2/D/C) stayed quiet following missed coupon payments in the prior week and Fitch Ratings’ downgrade of the issuer on Friday.

The year-to-date global corporate default tally now totals five after TPC Group and Future Retail Ltd. defaulted due to missed interest payments, according to a S&P Global Ratings report on Friday.

In other market action on Monday, S&P said the U.S. distress ratio fell to 2.4% as of Jan. 14 from 2.6% in December.

More than 58% of distressed issues are rated in the CCC category.

Wesco trades up

Wesco’s 8½% senior secured notes due 2024 (Caa3/CCC+) shot up 1¼ points to 86 bid on more than $19.76 million of bonds traded by the close on Monday, a source said.

The issue traded as low as 85 and as high as the 88½ bid area during the session after moving Friday at the 83¼ bid to 84¾ bid range.

Wesco’s 9% senior secured notes due 2026 (Caa3/CCC+) jumped 2¼ points by the close to 85½ bid on $11 million of secondary supply.

The 9% notes were seen as high as 87½ bid over the day following news reports that Incora hired restructuring advisers.

Wesco, acquired in 2020 by an affiliate of investment firm Platinum Equity and combined with U.K.-based aerospace and defense industry supplier Pattonair, is now doing business as Incora.

The Fort Worth-based aerospace supplier issued the senior secured notes via Wolverine Escrow LLC.

Diamond Sports mostly flat

Diamond Sports’ paper was mostly flat over the day with the secured notes unchanged and the unsecured notes less than ½ point weaker in thin trading, a source said.

The company’s 5 3/8% senior secured notes due 2026 (Caa1/CCC) went out unchanged at 45¼ bid.

The issue ended Friday down ½ point.

Diamond Sports’ 6 5/8% senior unsecured notes due 2027 (Ca/CC) fell over ¼ point on Monday to under the 25¾ bid area after last trading Friday about ¼ point softer at 26 bid.

Company parent Sinclair Broadcast Group Inc. reported in a regulatory filing on Monday that Diamond Sports received consent to extend the start of the solicitation of consents for the exchange of its term loans and 5 3/8% senior secured notes due 2027 and 12¾% senior secured notes due 2026 to Tuesday.

The solicitation start was previously scheduled to begin on Friday.

The Chesapeake, Va.-based sports broadcast group announced on Jan. 13 a $600 million new money financing transaction and debt exchange of its term loans, as well as its 5 3/8% notes and 12¾% notes.

TPC paper inactive

TPC Group’s 10½% senior secured notes due 2024 (Caa2/D/C) were quiet on Monday, a market source said.

The notes were last seen trading in the prior week at the 55 bid range, down over 10 points on the week.

Fitch downgraded the company twice in the prior week and lowered the 10½% notes to C on Friday.

TPC announced on Thursday that the company is in forbearance until March 18 after it missed about $53 million of coupon payments due Feb. 1 on its 10½% first-priority lien notes and 10 7/8% first-priority lien notes due 2024.

The Houston-based chemical manufacturer entered into the forbearance agreement with Ad Hoc Group Ltd., which is providing it with $52 million of liquidity through a commitment to purchase additional senior secured priming notes due 2024.

Distressed returns weak

Distressed returns softened over the back half of the previous week.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return on Friday was minus 0.72%, compared to minus 0.47% on Thursday, 0.61% on Wednesday, 0.5% on Tuesday and 0.66% on Jan. 31.

Month-to-date total returns declined to minus 0.09% versus 0.64% on Thursday, 1.11% on Wednesday and 0.5% on the first day of February.

Year-to-date returns dropped to minus 1.61% on Friday from minus 0.9% on Thursday, minus 0.43% on Wednesday, minus 1.03% on Tuesday and minus 1.53% at the week’s start.

© 2015 Prospect News.
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